Post ID 45315

Payday Lending Regulations Neglect To Address Concerns of Discrimination

In Segregation in Texas, Professor Richard Epstein contends that the disparate effect standard can be an “intrusive and unworkable test that combines high administrative price with chance of welcoming massive abuses by both the courts as well as the executive branch of government…” Indeed, in the context of payday financing, the disparate effect test is definitely an unworkable test, yet not a great deal for the threat of welcoming massive abuses, but alternatively for the hefty burden the test places on claimants.

The Department of Housing and Urban Development’s formula for the disparate impact test is really a three-part inquiry: at phase one the claimant must show that a certain practice possesses “discriminatory impact.” At phase two, the lending company may justify its methods simply because they advance some “substantial, legitimate, nondiscriminatory interest.” At stage three, the claimant may override that reason by showing the genuine ends of “the challenged practice might be served by another training which has a less discriminatory impact.”

Despite the fact that proof discriminatory intent isn’t necessary, claimants nevertheless bear a difficult burden at phase one in showing with advanced analytical analysis demonstrable undesireable effects and recognition associated with the exact training causing these impacts. (more…)